What will an H-1B cap hike bring to U.S.?

WASHINGTON -- Ten U.S. senators this week agreed to sponsor a bill that would allow the annual H-1B visa cap to rise to as high as 300,000, leaving opponents and some researchers concerned.

Under the proposal, the cap would begin at 115,000 and rise as H-1B demand increases or fall when it slackens. Critics say the plan would escalate problems already faced by U.S. workers.

Adding more entry-level and young H-1B workers may boost offshoring and put pressure on wages, increase age discrimination and discourage U.S. students from entering the IT business, say opponents.

The Senate proponents say the H-1B visas are needed to fill critical jobs and keep the U.S. competitive. The visas give companies the ability to hire who they want.

Some lawmakers, though, want to lessen the emphasis on temporary workers and instead focus on encouraging foreign graduates of U.S. universities to remain in the country. These officials would offer permanent residency to foreign students that earn an advanced degree in science, technology, engineering and math, or the so-called STEM degrees.

President Barack Obama supports a STEM visa, but his administration has not yet said whether it would support a plan to increase the H-1B cap.

Many in the IT industry have long argued that U.S. schools aren't producing experts with the tech skills they needs.

The shape of the debate was defined 1998 when Norman Matloff, a computer science professor at the University of California at Davis, challenged the industry at a hearing before a U.S. House committee, where he spoke on "Debunking the Myth of a Desperate Software Labor Shortage."

Microsoft, which may be the most outspoken industry advocate for H-1Bs, says this visa is particularly important for its hiring needs. The company refutes critics who say the guest worker program lowers wages for tech workers.

Microsoft says the typical pay for a new programmer or software engineer ranges from $100,000 to $120,000. "A person with an H-1B visa is not be treated differently than any other new hire," a spokeswoman said.

But that's Microsoft.

At a 2011 House hearing on H-1B visa issues, U.S. Rep. Zoe Lofgren (D-Calif.) said she had asked the Labor Dept. for a report the average wage for computer system analysts in her district. The result: $92,000 overall for entry level workers, but department also reported that the entry level rate prevailing wage rate for an H-1B worker was $52,000.

"We can't have people coming in and undercutting the American educated workforce -- that is just a problem," Lofgren said.

The U.S. Government Accountability Office (GAO) examined the Labor Dept. data and found that a majority of H-1B workers were hired at entry level.

In a year-long period ending midway through 2010, The GAO reported that 54% of the H-1B labor applications "were categorized as entry-level positions and were paid at the lowest pay grades allowed under the prevailing wage levels."

In response to the I2 bill, the Programmers Guild said all H-1B workers must be paid a salary of $100,000. "This deters employers from misusing" the H-1B visa "as a source of cheap, low-skilled, labor at the exclusion of new graduates."

Companies with the most critical need for H-1B visas are in India or companies that rely heavily on its labor force. Indian offshore outsourcing firms emerge year after year as the top H-1B users.

The most recent full-year data, 2011, found Cognizant, a New Jersey-based firm is that major offshore provider, atop the list with 5,715 H-1B approvals. It was followed by year-earlier leader Infosys, an India-based outsourcer, at 4,024. Other India-based firms, Wipro, Tata Consultancy Services, Larsen & Toubro, were among the top 10 users of the H-1B visa, according to data provided by the U.S. Citizenship and Immigration Service.

Microsoft, IBM and Google are also among the top H-1B users, and it is those companies, and not the Indian firms, that shape the visa debate in Washington.

The visas may increase offshoring, argues Ron Hira, a public policy professor at the Rochester Institute of Technology.

"Since the offshore outsourcing industry is the biggest beneficiary of the H-1B, we know there will be more offshoring of high-wage, high-tech jobs," he said.

The conclusions of his examination of the temp visa programs is included in a 2010 2010 report.

The H-1B visa now has two caps, a 65,000 cap and a 20,000 cap for advanced degree STEM grads of U.S. universities. The bill that would allow up to 300,000 H-1B visas, the Immigration Innovation (I2) Act, exempts advanced degree STEM grads from any cap.

The H-1B provisions I2 Act is seen by experts as an industry "ask" or a "marker," or better yet a wish list untouched by potential opponents. It doesn't include, for instance, a restriction to limit the number of visas that offshore firms may use to 50% of their U.S. workforce.

Sen. Dick Durbin (D-Ill.), who is part of a separate group of eight senators working on a comprehensive immigration bill, has long favored such a restriction. He said this week that he would continue to seek it.

That threat of a visa restriction prompted one Indian-based firm, Wipro, to suggest, in comments two years ago, that it might accelerate U.S. hiring to decrease reliance on the cap.

The I2 bill includes automatic escalators that are intended to be market-based, allowing the H-1B cap to gradually rise with demand, by as much as 20,000 annually. If demand for H-1B visas fall in any year, the cap declines under the proposal.

Lindsay Lowell, director of policy studies at the Student of International Migration at Georgetown University, points out that "demand for H-1Bs' is not the same as 'market based demand based on shortages,' which is to say we graduate somewhere between 1.4 and 2 times as many domestic STEM students as the BLS (Bureau of Labor Statistics) projects we'll need over the coming decade."

"Whatever is driving that makes it likely that escalation triggered by petitions in excess of an annual cap will lead to increasing H-1Bs, maybe all the way to 300,000. Why do we need that?" said Lowell.

Hira says that "American engineers and IT workers will be undercut in both wages and working conditions as they compete with guest-workers who can legally be paid below-market wages and who are essentially indentured servants."

It isn't just the H-1B increases that concern Matloff, but the liberalization of the STEM green cards. Those visas user would have a heavy impact on older students, people who come back for graduate study after years in the industry.

"It's already bad for students in this category. [The I2 bill] "would make things far worse," said Matloff in an email to Computerworld.

"It's also a shame that there is almost no attention being paid to what I regard as the absolutely core problem with H-1B and green cards: They are causing an internal brain drain, in which America's own best and brightest realize that the tech field is just into a good long-term route for those who have good problem-solving ability, quantitative skills and so on," said Matloff.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov, or subscribe to Patrick's RSS feed . His e-mail address is pthibodeau@computerworld.com.

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